CIF worry at 20% mortgage deposit
The meeting, which was sought by the Central Bank, is expected to focus on the Central Bank’s mortgage policy proposals, the house building market and the advancement of the Government’s Construction 2020 strategy.
Over the weekend, it was reported that the Central Bank is looking at introducing a 15% mortgage requirement, rising by 1% per year over the next five years to 20%.
That is in contrast to reports at the end of last week that Central Bank governor Patrick Honohan was insisting that new rules would be implemented in full, once agreed, and would not be staged as that would distort the market.
CIF director general Tom Parlon said: “We will be voicing our concerns about the Central Bank’s proposed mortgage policies to the IMF.
The measures will dramatically reduce the level of house building.
That is not what the country needs at this time. We are a long way short of building the number of houses per year that our population requires.
“The Government have said we need to build 25,000 units per year. The ESRI has said the same. We didn’t even reach half that level in 2014.”
He said the last two years had seen demand outstripping supply. That had led to a strong rise in house prices and dramatic rises in rental costs in parts of the country.
“The Central Bank measures will lessen the demand for the purchasing of new houses as less people will be able to afford a deposit,” said Mr Parlon.
“But the measures will also severely impact on supply. House-building projects will be put on hold if there is less demand.
“Dampened demand will make a lot of these house building projects less financially viable.
There will be questions as to how the builders can expect to sell the houses if people now have to save up to 20% of the full price to get a mortgage.
“So the Central Bank will effectively be delaying the necessary improvement in supply.”
